Affordable Care Act, also known as Obamacare, was signed by President Obama in 2010. This act was enacted to expand health coverage to 32 million Americans who are currently uninsured. This act will also reduce the rise in cost of healthcare. Finally, this act will improve the standards of service an insurer must provide. This law will come to effect starting January 1st, 2014.
As part of the standardizing the services that an insurer must provide, insurance must provide these ten services in order to qualify for the Obamacare:
- Ambulatory services
- Emergency services
- Maternity and newborn care
- Mental health and substance use disorder services, including behavioral health treatment
- Prescription drugs
- Rehabilitative and havilitative services and devices
- Laboratory services
- Preventive and wellness services and chronic disease management
- Pediatric services including oral and vision care
There are several ways that you can be covered by insurance:
- Insurance bought out of pocket
- Veteran’s health program
- Plan offered by employer
- Medicaid or Children Health Insurance Program
- Grandfathered health plan in existence before the health reform law was enacted
Although this law was passed by federal government, how each state decides to implement is up to individual states. The state of Washington has decided to go with the exchange program. Exchange program brings all qualified insurance plans to one marketplace for people to compare and shop. State of Washington has created a site for this purpose. One must purchase their insurance through this site in order to qualify for possible tax credit if applicable. Link to this site can be found on the bottom of the page.
All citizens and legal residents are required to have health coverage. Only exception to this rules are if one objects due to religious reasons, is incarcerated, or American or Alaskan Indian.
From the site, one can purchase different level of coverage for you or family. Difference between levels is based on how much of medical cost the health plan pays and how much you co pay.
- Bronze level – health plan pays 60%
- Silver level – health plan pays 70%
- Gold level – health plan pays 80%
- Platinum level – health plan pays 90%
Cost of insurance premium is based on your residence and various plans and its cost can be found here. Although the cost of plan is listed for individuals, if insuring family, the cost will be less than sum of all individual members of your family. The amount of credit one might be applicable is depended on the household income and its comparison to the federal poverty line. Closer to federal poverty line your household income is, more tax credit you will receive. One will also receive credit for any children you may have. The exchange site will ask various questions to determine what benefits you are eligible for. Table for federal poverty line for 2013 can be found here.
Failure to comply with the new law will result in penalty on next federal income tax period.
- For 2014, penalty of $95 per adult and $47.50 per child (up to $285 for a family) or 1% of household income, whichever is greater will be imposed.
- For 2015, penalty of $325 per adult and $162.50 per child (up to $975 for a family) or 2% of household income, whichever is greater will be imposed.
- For 2016, penalty of $696 per adult and $347.50 per child (up to $2,085 for a family) or 2.5% of household income, whichever is greater will be imposed.
If you are already covered by qualified health insurance that meets the standard, you can choose to continue with current provider or after comparing prices, decide to switch to one of the option for sale.
Starting 2014, Medicaid will expand its coverage to include
- Individuals between 19 and 65 previously not eligible for Medicaid program
- Income below 138% FPL
- Not entitled for Medicare
MAGI (Modified Adjusted Gross Income) will be used to determine if one qualifies for Medicaid. MAGI follow the federal tax rules and same as amount reported on your federal tax. All other previous Medicaid rules will remain the same and will not affect the Health care reforms.
Employers with fewer than 50 full time employees are not required to provide insurance to their employees. However, if you choose to provide coverage for your employees, you may be eligible for tax credit. The amount of credit is based on the number of employees and the average wages or salary of your employee. You can also purchase the insurance for small business on the Health Plan Finder. However, currently, due to lack of response from insurance providers, only county that is offering small business insurance is in Clark County. This issue was reported by many states and will not come to full implementation till next year.
For those that employ 50 or more full time employees, it is required under the Obamacare to provide health coverage. Furthermore, large employee insurance will not be sold through the exchange website and therefore must be acquired directly via insurance provider. Failure to do so will result in penalty. The amount will be based on the number of employees as well as the average wage or salary. Due to complications at the federal level, the enforcement for Obamacare for large employers will not come in to effect till 2015.
Adjusted Gross Income (AGI) as well as Modified Adjusted Gross Income (MAGI) will be used to determine how much tax credit you are eligible to. This information is also used for your federal taxes. It is in your best interest to determine this information accurately. Inaccurate information may end up costing you more in the future as well as potentially exclude you from possible tax benefits.
You can start purchasing your health insurance starting October 1st, 2014 from Health Plan Finder and Obamacare will come into effect starting January 1st, 2014.
With this new legislation, you can’t be denied health coverage even if they are sick. Nor will there be cap on lifetime benefit amount. Furthermore, young adults can stay under their parent’s plan till the age of 26 which will result in cost saving. If you qualify for tax credits, it may reduce you or your family’s health insurance. On the other hand, due to this regulation requiring you to have health coverage, it may end up costing extra in unnecessary expense.
To find estimated cost and credit for you or your family, use the calculator here.
For more information please check Washington Health Benefit Exchange.
Qualified insurance for individual and family as well as small business, when available, will be offered from Washington Health Plan Finder.